Letters to the Editor

Updated May 7, 2007 12:01 am ET / Original Sept. 15, 2019 5:55 am ET

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Keep It Real

To the Editor:

Your April 23 story "Up to the Challenge," about your investment contest, ranked the top student and professor participants based on portfolio returns. Yet your ranking of the top 100 financial advisers ("Best in Class," Cover Story, April 23) was based on "the biggest books of business...and following the best practices." Your compiler assumed that asset growth implies both solid returns and new customers, a premise that may not be valid. May I humbly suggest that top-financial-adviser rankings in the future be based on actual portfolio results, possibly on a one- and five-year basis?

Stanley Farb Naples, Fla.

Buyers Beware

To the Editor:

Regarding Alan Abelson's column on -- among other subjects -- the increases in housing foreclosures ("Flurry of Foreclosures," Up & Down Wall Street, April 23), I must say I am mystified at his suggestion that distressed homeowners "burn effigies of the brokers and bankers who conned them into buying houses they couldn't afford."

Whatever happened to "caveat emptor?" When they bought their housing, they also agreed to "buy" the terms of financing. Real estate is perhaps the single biggest purchase in many homeowners' lives, and being stretched thin by financing with aggressive lenders does not relieve these unfortunate souls from the responsibility of making intelligent decisions. Quite the opposite.

Shawn Clark Santa Clara, Calif.

Asset Management

To the Editor:

Stephen Mauzy ("Questioning the Cult of Buffett," Other Voices, April 23) missed the point about Berkshire Hathaway's decision not to split its shares. Warren Buffett has been trying to attract long-term shareholders to the company through strong performance and a refusal to cave in to the trading and liquidity demands of Wall Street. Without a split, Berkshire Hathaway stock has annual volume and turnover that provides sufficient liquidity to permit the scheduled sale of most of Buffett's holdings for charitable purposes. According to the 2006 Annual Report, these sales are only expected to add about three percentage points to the stock's yearly volume.

Time and time again, Buffett has demonstrated that true "owner capitalism" means looking out much further than the next quarter or even the next year. Berkshire Hathaway owners, of which I am one, are properly focused on the long-term prospects of the company and not on the issue of whether its daily quote can fit within a newspaper's stock tables. If Mauzy is looking to trade stocks selling for less than $100 a share, he should look elsewhere.

Niels Holch Washington

To the Editor:

Stephen Mauzy offers Warren Buffett's large portfolio of subsidiaries as evidence that he has abandoned his old style of investment concentration. I'd say the real source of his success is finding honest businesses with durable competitive advantages that are cheap (and that he understands).

And if he says that Buffett fails to treat shareholders like co-owners, then there is no word to describe the level of treatment (or neglect) that shareholders of other large companies receive from their respective CEOs.

Howard Yu Princeton, N.J.

To the Editor:

I am always amused when people critique an investor who is the second- (or perhaps third-) wealthiest person. This is especially true when the criticisms include too high a stock price (I've purchased as few as two of the "B" shares for less than what 100 ExxonMoblil shares cost today) and too much cash on the balance sheet (which may be temporary in the mind of Buffett -- he thinks in the long term).

It's like denigrating Michael Jordan's basketball abilities, based on his scoring too many points in a game that his team won. Come on, get over your jealousy and try to learn from the man! He must have done at least one or two things right during his career!

Greg Kozlowski Prescott, Ariz.

An Inflation of Rates

To the Editor:

Gene Epstein's Economic Beat column of April 23 ("Bernanke Gets Back to His Comfort Zone") implies that it was slowing economic growth, rather than the Federal Reserve's 17 upticks in interest rates, that caused core inflation to moderate recently. But the 47% rise in defaults and foreclosures recently reported by RealtyTrac highlights the economic damage that higher interest rates have already wrought in California and other high-priced coastal regions.

The underlying real interest rates on both subprime and teaser-rate option ARMs have risen about five percentage points since 2002, from about 3% to more than 8% in some cases, putting mortgage payments out of reach of many first-time and middle-income buyers.

Bernanke and the Fed are directly responsible for the bursting of the housing bubble, which is the main cause of the current slowdown. It is already impacting both employment and consumption. The core cause of inflation is still money,

Harlan Green Santa Barbara, Calif.

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